India to remain fastest-growing large economy in 2023 and 2024: IMF

WASHINGTON: The International Monetary Fund (IMF) on Tuesday projected India's growth to be 6.1 per cent in 2023 from 6.8 per cent in 2022, though the country will remain the fastest-growing large economy in 2023 and 2024.

The international agency on Tuesday released the January update of its World Economic Outlook, according to which the global growth is projected to fall from an estimated 3.4 per cent in 2022 to 2.9 per cent in 2023, then rise to 3.1 per cent in 2024.

The IMF in its note said: "Growth in India is set to decline from 6.8 per cent in 2022 to 6.1 per cent in 2023 before picking up to 6.8 per cent in 2024, with resilient domestic demand despite external headwinds."

According to the report, growth in emerging and developing Asia is expected to rise in 2023 and 2024 to 5.3 per cent and 5.2 per cent, respectively, after the deeper-than-expected slowdown in 2022 to 4.3 per cent attributable to China's economy.

"Our growth projections actually for India are unchanged from our October Outlook. We have 6.8 per cent growth for this current fiscal year, which runs until March, and then we're expecting some slowdown to 6.1 per cent in fiscal year 2023. And that is largely driven by external factors," Pierre-Olivier Gourinchas, Chief Economist and Director, Research Department, IMF, told reporters here.

According to the update, growth in China is projected to rise to 5.2 per cent in 2023, reflecting rapidly improving mobility, and to fall to 4.5 per cent in 2024 before settling at below 4 per cent over the medium term amid declining business dynamism and slow progress on structural reforms.

The Chief Economist and Director also said "Overall, I want to point out that emerging market economies on the whole and developing economies seem to be already on their way up. We have a slight increase in growth for the region from 3.9 per cent in 2022 to 4 per cent in 2023."

The January update also said growth in the ASEAN-5 countries (Indonesia, Malaysia, Philippines, Singapore, Thailand) is similarly projected to slow to 4.3 per cent in 2023 and then pick up to 4.7 per cent in 2024.

"Another relevant point here is that if we look at both China and India together, they account for about 50 per cent of world growth in 2023. So a very significant contribution," Olivier Gourinchas said. On inflation, IMF in its report said, "About 84 per cent of countries are expected to have lower headline (consumer price index) inflation in 2023 than in 2022.

Global inflation is set to fall from 8.8 per cent in 2022 (annual average) to 6.6 per cent in 2023 and 4.3 per cent in 2024 --above pre-pandemic (2017-19) levels of about 3.5 per cent."

IMF said the projected disinflation partly reflects declining international fuel and nonfuel commodity prices due to weaker global demand. It also reflects the cooling effects of monetary policy tightening on underlying (core) inflation, which globally is expected to decline from 6.9 per cent in the fourth quarter of 2022 (year over year) to 4.5 per cent by the fourth quarter of 2023.

"Still, disinflation will take time: by 2024, projected annual average headline and core inflation will, respectively, still be above pre-pandemic levels in 82 per cent and 86 per cent of economies," IMF said in its January update.